Organotypic cultures comprised primarily of type II alveolar pneumonocytes were characterized by ultrastructural and biochemical methods. The type II cells in these cultures contained the following differentiated properties related to pulmonary surfactant synthesis that are present in type II cells in vivo: they synthesize lamellar bodies (organelles in which pulmonary surfactant is stored prior to secretion); they contain significant phosphatidic acid phosphohydrolase activity and surfactant-associated esterase activity; they can utilize palmitate, glucose, and choline for production of surfactant phsophatidylcholine. We are presently determining the influence of various gaseous and particulate air pollutants on pulmonary surfactant synthesis, storage, and secretion by the type II alveolar pneumonocytes in the organotypic cultures.